Amazon profits slide as investments hit the bottom line
Amazon’s profits slid by 26% in the third quarter as the company upped investment in free shipping and it cloud storage business.
Revenues were up 24% year on year to $70bn for the three months to the end of September, but profits fell to $2.1bn, from $2.9bn a year earlier. It expects sales to increase by between 11% and 20% in the crucial Christmas quarter.
The company spent $800m expanding its free one-day delivery service in the US, while worldwide shipping costs increased 46% to $9.6bn. It is also investing heavily in Amazon Web Services (AWS) cloud storage, which saw sales reach $9bn.
Amazon also reported that sales in its ‘other’ business, which mostly comprises advertising, reach $3.58bn, up 45% year on year.
Government pulls ‘Get Ready for Brexit’ ad campaign
The UK Government has reportedly pulled its ‘Get Ready for Brexit’ ad campaign as Prime Minister Boris Johnson admits he has failed in his aim to leave the EU before the end of October.
Advertising space in a number of newspapers earmarked for the campaign will no longer feature the messaging, according to iNews. However, the ads to still appear to be running online.
The ad activity is understood to have cost at least £100m. But a report from the National Audit Office has been scathing of its impact.
“On 1 September 2019, the government launched a major communications campaign to help individuals and businesses prepare for EU exit, including newspaper and television adverts, improved guidance and direct engagement with industry,” the report says.
“However, at this late stage and with ongoing uncertainty about the prospect of no deal on 31 October, this may have limited impact.”
Johnson has agreed a deal with the EU but is struggling to get it through Parliament. While MPs have agreed to the deal in principle, they voted down plans to rush the bill through the House of Commons in just three days.
Johnson is now calling for a General Election on 12 December, but will need two-thirds of MPs to vote in favour if he is to get his way.
WPP returns to growth as turnaround takes hold
WPP has returned to growth for the first time in more than a year as its turnaround under CEO Mark Read gains pace.
The company generated organic growth of 0.7% in the third quarter, an improvement on the 0.6% decline expected by analysts. A stronger quarter in Europe was enough to offset declines in a difficult US market.
Read describes the performance as “encouraging” but said he expects “twists and turns along the way” to achieving the group’s long-term goals. His strategy includes simplifying the group, strengthening technology offerings and reducing debt.
Despite the improvement, WPP has reiterated its full-year outlook, expecting a decline of between 1.5% and 2%.
“WPP’s performance in the third quarter is another important step in the strategy we outlined in December 2018 to return the company to sustainable growth in line with our peers in 2021,” Read says.
WPP’s growth is in stark contrast to French rival Publicis, which earlier this week cut its full-year sales target for the second time this year.
Global ad spend to grow 6% in 2020
Global investment in advertising is forecast to grow by 6% year on year in 2020 to $656bn, buoyed by spend on Google, Facebook and Amazon.
That growth is up on the 2.5% rise estimated for 2019, but down on the 7.3% growth recorded last year, according to data from WARC.
It expects eight product categories to increase investment ahead of the global rate: financial services (11.8%), household and domestic (10.5%), transport & tourism (9%), telecoms & utilities (8.5%), technology & electronics (8.4%), alcoholic drinks (6.9%), automotive (6.8%) and soft drinks (6.5%). The retail sector is expected to post the slowest growth, at just 2.6%, although this is its fastest rise since 2013.
WARC Data managing editor James McDonald says: “Weak macroeconomic indices, waning business confidence and rising geopolitical tensions have increased the possibility of a recession in 2020. Within this climate, our forecast of six percent growth in global advertising investment may seem optimistic, but these projections are in line with those from the IMF and Euromonitor for GDP and consumer spend, respectively.
“Incremental ad spend during quadrennial events – the Tokyo Olympics and US presidential campaigns – may be muted next year but will still have a positive net contribution to global growth, as would a stronger yuan and a business-favourable ‘Brexit’. Advertisers also intend to increase spend on Google, Facebook and Amazon properties, with global media spend ultimately flat elsewhere.”
Internet is the fastest growing ad medium for every sector except tech and electronics, where outdoor will see the fastest increases at 11.4%.
Overall, internet formats are expected to account for more than half of ad spend for the first time next year, worth $336bn. Performance marketing, online video and social media are driving this growth.
Beyond internet formats, ad investment is flat, and has been since 2012.
News UK shakes up leadership team
News UK is shaking up its leadership team, moving Chris Duncan to a new role as managing director of platform partnerships and hiring The Economist group operating officer and publisher Michael Brunt to the new role of general manager, Times Newspapers.
Reporting to News UK COO David Dinsmore, Brunt will have overall responsibility for the financial performance of The Times and The Sunday Times. Brunt joined the Economist Group in 2006 and has held senior roles in marketing and circulation, including CMO. He is currently responsible for circulation, sales, marketing solutions, events and analytics.
Alongside Brunt, Jo Bucci, COO at Wireless, News UK’s audio business, takes on the job of GM of The Sun.
Dinsmore says: “The Times and The Sunday Times are the world’s best-known quality newspapers, with over half a million subscribers, while The Sun is the UK’s best-selling daily newspaper and number one online newspaper brand.
“These new general manager roles will be hugely influential in driving our strategy to grow and monetise the millions of people who engage with our news brands daily. Michael and Jo both have a proven track record of building and monetising powerful media brands across platforms.”
Elsewhere, Victoria Bell, currently interim CMO for The Sun, takes on a new role as GM of marketing across News UK with a remit to lead the combined marketing of The Times, The Sunday Times, The Sun and its national radio brands.
Thursday, 24 October
Facebook defends plans for cryptocurrency amid grilling by US lawmakers
Facebook CEO Mark Zuckerberg attempted to quell concerns about the launch of Facebook’s cryptocurrency Libra at a US Congress hearing, admitting that he is not the “ideal messenger” to discuss the project.
He told the hearing: “We’ve faced a lot of issues over the past few years and I’m sure there are a lot of people who wish it were anyone but Facebook that was helping to propose this. But there is a reason we care about this and that’s because Facebook is about putting power into people’s hands.”
Zuckerberg tried to reassure the US senators amid claims the cryptocurrency could be abused by criminals and terrorists for the purposes of money laundering, had the potential to disrupt financial markets, and would give Facebook significant control over user data. The G7 nations have already stated they will block Libra if Facebook cannot prove the cryptocurrency is secure.
Facebook CEO’s stated that his company would never launch Libra without government approval, nor would it control the board of the Libra Association, the independent body set up to police the cryptocurrency. The issue is that to-date eight of the association’s 28 founding members have pulled out, including Mastercard, Visa, eBay and PayPal.
During the same hearing, Democratic senator Alexandria Ocasio-Cortez challenged Zuckerberg on his role in the Cambridge Analytica data harvesting scandal. She asked when he first found out about the data breach, and tackled him on Facebook’s decision not to fact-check political advertising.
Zuckerberg stated that Facebook does support the removal of content in cases of violence or voter suppression, according to Guardian reports, but did not answer whether the company would take down “outright lies” if they appeared in political ads.
WeWork poised to cut 4,000 jobs as investor steps in
WeWork is poised to cut 4,000 jobs, or a third of its global workforce, after its major investor SoftBank stepped in to rescue the struggling business.
As part of the turnaround plan, 1,000 of the job losses are likely to hit employees such as janitorial staff, according to reports in the Financial Times, while the number of marketers affected remains unclear.
SoftBank’s chief operating officer Marcelo Claure, who will chair the WeWork board, said the business must now “right-size” in a bid to “achieve positive free cash flow and profitability”.
It is also thought that WeWork will scale back its operations in China and Latin America to focus on the US, Europe and Japan; the latter is home to SoftBank’s domestic headquarters.
Claure told WeWork employees there had been a lack of focus “on our core business”.
On Tuesday, SoftBank invested $10bn (£7.7bn) to take control of WeWork, paying the company’s co-founder Adam Neumann $1.7bn (£1.3bn) to exit the business.
Amazon ramps up renewable energy investments as it targets zero carbon
Amazon has invested an undisclosed sum in three renewable energy projects in the US and UK to power its Amazon Web Services (AWS) data centres.
The Amazon Wind Farm is located on the Kintyre Peninsula in Scotland and is the largest corporate wind power purchase agreement in the UK. It is expected to provide 50 megawatts of new renewable capacity and 168,000 megawatt hours (MWh) of clean energy annually, enough to power 46,000 UK homes.
In the US, Amazon is investing in solar energy projects in North Carolina and Virginia, which combined are expected to generate 500,997 MWh of energy annually.
Once up and running in 2021, the three renewable wind and solar energy projects will supply energy to Amazon’s AWS data centres and go some way to helping the company reach 80% renewable energy usage by 2024.
Amazon’s wider target is to reach 100% renewable energy by 2030 and net-zero carbon by 2040.
To track its progress, the company has launched a new transparency website to report on its sustainability commitments, initiatives and performance, which includes information on Amazon’s carbon footprint and other sustainability metrics.
“We’ve announced eight projects this year and have more projects on the horizon – and we’re committed to investing in renewable energy as a critical step toward addressing our carbon footprint globally,” says Amazon’s director of sustainability, Kara Hurst.
TikTok launches new safety initiative with creator-led campaign
Social media video app TikTok has launched a safety campaign that aims to inform users about various in-app features, such as the ability to tackle hate speech and report inappropriate content.
The campaign includes a new set of safety videos made by TikTok creators from around the world, as well as a wider digital marketing campaign that raises awareness of how to keep users safe online.
Other in-app features promoted in the safety campaign include the ability to block undesired users, filter comments and activate privacy settings.
Owned by Chinese tech giant ByteDance, TikTok has encountered a number of controversies over its approach to safety. In February, the app was hit with a record $5.7m (£4.3m) fine after the US Federal Trade Commission said it had illegally collected personal information from children under the age of 13.
This week, meanwhile, Islamic State militants were found to have posted short propaganda videos on the social network, which have since been removed.
TikTok UK director of global public policy Elizabeth Kanter says: “Safety is our number one priority. This new campaign, featuring some of our most loved creators from a variety of backgrounds and genres, demonstrates our commitment to originality, as we educate, empower and encourage our global community to stay safe and positive.”
Tesco plots Finest pop-ups in a bid to entice festive shoppers
Tesco will target shoppers in the run-up to Christmas by opening high-end pop-ups in city centres.
It is thought the pop-ups will sell products from Tesco’s Finest premium range, as well as a selection of wine. The hybrid shops/wine bars are expected to be open for four to six weeks in November and December. The supermarket is looking at small sites in London and other UK cities.
The move was first discussed by outgoing CEO Dave Lewis in June, who described Tesco Finest as “one of the largest food brands in the country”, with a “very high percentage of more upmarket customers.”
Speaking at the time, Lewis added: “The opportunity to curate that range and bring new things in a more convenient outlet is something that we have tested, is something we’re interested in.”
Wednesday, 24 October
Uber Eats partners with Costcutter in first grocery tie-up
Uber Eats is partnering with Costcutter supermarkets in its first foray into the grocery sector. The deal will enable more than 1,700 convenience shops to sell everyday items via the app.
Sean Russell, marketing director for Costcutter, says: “With 28% of food and groceries now purchased online in the UK, our partnership with Uber Eats is a great way to reach new customers and demonstrates our continued commitment to helping our independent retailers thrive.”
Uber Eats is not the only delivery service to branch out into grocery; Just Eat launched a test of an express grocery delivery service with Asda in July.
Russell adds: “We’ve responded to strong demand for real-time delivery and taken the lead in the convenience sector to give our retailers another point of difference in a highly competitive sector.”
Costcutter will be holding roadshows in the coming weeks to demonstrate how retailers can embrace and maximise the partnerships.
McDonald’s sees sales boost thanks to Uber Eats partnership
McDonald’s UK saw a boost in sales thanks to investment in delivery and its mobile app.
McDonald’s reported sales growth of 5.9% in the quarter to September, which was driven by strong growth in markets such as the UK.
The fast-food giant says growth in the UK was particularly driven by its continued online expansion and new products on its menu, with its Uber Eats partnership surging in popularity.
However, sales in the US were disappointing due to strong competition at breakfast time and investment from rivals in plant-based products.
McDonald’s CEO Steve Easterbrook says: “Our third quarter performance was strong, and broad-based momentum continued with our 17th consecutive quarter of global comparable sales growth.”
Just Eat fights off last-minute takeover
Just Eat is fighting off a last-minute takeover offer as it presses ahead with its planned £8.2bn merger with Takeaway.com.
Investment firm Prosus says it will pay £4.9bn, or 710p per share, a 20% premium on the 594p per share that Just East agreed with Dutch-based Takeaway three months ago.
Prosus already owns a stake in the listed German food delivery group Delivery Hero and controls Brazil’s iFood and India’s Swiggy. Just Eat’s board is under mounting pressure after rejecting the offer.
The company says: “The board of Just Eat has considered the terms of the Prosus offer and believes that it significantly undervalues Just Eat and its attractive assets and prospects both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com.”
Some analysts suggested the offer was opportunistic as it followed a fall in the share price of Just Eat after disappointing trading figures released this week.
WeWork accepts multi-billion dollar Softbank rescue deal
WeWork has accepted a bailout from SoftBank that will see its founder walk away with more than £1.3bn.
The troubled co-working firm, which abandoned its public offering last month, agreed to a rescue package that would see its largest investor provide £6.4bn in funding and take an 80% stake in the company.
WeWork, which rents shared office space, has helped to popularise co-working. It has grown from a single office in New York City to more than 15,000 employees across 500 locations around the world.
Its founder Adam Neumann is being replaced by SoftBank executive and newly appointed executive chairman, Marcelo Claure, but will remain as a board observer.
Meanwhile, potentially 2,000 WeWork employees are facing redundancy.
Part of WeWork’s ethos when Neumann helped set up the business in 2010 was that it was “a place you join as an individual, ‘me’, but where you become part of a greater ‘we’.”
Discovery launches streaming platform
Media company Discovery is launching a streaming service that it promises will provide more opportunities for advertisers.
The ad-funded platform, called Dplay, will provide programming from across the media group’s free channels, including Really, Quest and Home.
Discovery’s UK and Ireland boss James Gibbons says: “The free streaming service will increase opportunities for advertisers to engage with audiences across multiple platforms.”
The move brings the roll-out of Dplay to 10 markets, with more to be added in the near future,. Dplay will also be available on partner platforms and launch on additional devices and platforms in the first half of 2020.
Dplay will face tough competition with the arrival of BritBox, the BBC and ITV’s ad-free joint venture, as well as Disney+ in 2020.
Tuesday, 22 October
Facebook cracks down on election interference
Facebook is ramping up efforts to prevent interference in elections, with the social network confirming it has shut down four new foreign interference operations originating from Iran and Russia ahead of the US 2020 election.
From next month, Facebook will label media outlets that are partially or wholly under the editorial control of their government as state-controlled media on both their page and in its Ad Library.
Content that has been rated false or partly false by a third-party fact-checker will start to be more prominently labelled at the top of photos and videos, while a new advertising policy will ban paid advertising that suggests voting is useless or meaningless or advises users not to vote.
Ahead of any potential election in Britain, Facebook is also extending its transparency measures for political ads to also apply to ads about social issues (such as immigration, health and the environment), as well as making improvements to how its Ad Library works and setting up a dedicated operations centre once a UK election is called.
Facebook will call for new regulations and UK electoral law to be updated for the digital age.
Alpro unveils new campaign with Usain Bolt
Alpro is launching its biggest-ever TV campaign featuring Usain Bolt as part of its strategy to bring plant-based food and drink into the mainstream.
The ad, which forms part of the brand’s cross-channel marketing campaign, ‘Good For You’, features “everyday protagonist” Simon, who makes a small, positive choice to start the day with an Alpro smoothie, followed by a morning jog.
Simon is caught by surprise when he’s overtaken by Bolt mid-run, but he carries on undeterred until he overtakes Bolt in a humorous exchange.
“Good For You is all about cheerleading life’s triers as they go about making progress their own way, and we couldn’t be more excited to have Usain Bolt in our corner helping us to do exactly that,” explains David Jiscoot, marketing director for Alpro UK & Ireland.
“We’re determined to tip plant-based food and drink, and Alpro, well and truly into the mainstream, which is exactly why we’ve put a message that’s sure to resonate with the masses at the heart of this campaign.”
Content featuring Bolt will also run across Alpro’s social media channels, alongside influencer marketing and a media partnership with BBC Good Food.
Dove moves to 100% recycled plastic bottles
Dove will move to 100% recycled plastic bottles and plastic-free packs for its beauty bar next year.
This will reduce the Unilever-owned brand’s use of virgin plastic by more than 20,500 tonnes per year – enough to circle the earth 2.7 times.
The initiatives form part of Unilever’s newest commitments on plastic. These include halving its use of virgin plastic by reducing its absolute use of plastic packaging by more than 100,000 tonnes and accelerating its use of recycled plastic, as well as helping to collect and process more plastic packaging than it sells.
“At Dove, we are proud to have more than 100 initiatives ongoing around the world dedicated to tackling plastic waste. But as one of the biggest beauty brands in the world, we have a responsibility to accelerate our progress even further,” says Richard Slater, Unilever’s chief R&D officer.
“Today’s announcements are an important step in our work to transform how we produce, use and dispose of plastic packaging. By making this move, we aim to drive the global recycling industry to collect more waste plastic and make more recycled plastic available for use.’’
TripAdvisor hands creative account to Mother
TripAdvisor has chosen Mother to be its new global creative agency of record ahead of the travel brand’s 20th anniversary next year.
Led out of its New York office, Mother, which replaces former agency Joint, will launch a new creative platform for TripAdvisor.
TripAdvisor says it will also introduce features and tools to enable faster, more personalised recommendations and advice from travellers that share the same needs and preferences.
“TripAdvisor, unlike any other company in the world, has the permission to help people find what’s good out there. It’s on us to dare to be bold enough to exercise that permission, and Mother is the type of partner who will challenge us to take our seat at the table,” says Lindsay Nelson, president of TripAdvisor’s core experience business unit.
“Brilliant creativity and smart, savvy communications planning and behaviours have the ability to drive business impact and change the course of a company’s history. But it won’t happen without a willingness to turn the status quo upside down, and collaborate with partners in unexpected ways.”
The Times turns Westminster Station into a jungle
The Times and Sunday Times have today taken over Westminster Station, rebranding it as Westminster Jungle to reflect the increasingly raucous state of British Politics and reinforce their commitment to keep readers well-informed in confusing times.
It marks the beginning of their second ‘Politics. Tamed.’ campaign, which portrayed politicians as animals in a Westminster zoo. Now, the animals have broken free from their benches and nature has taken over, as they roam the jungle and take hold of the House of Commons.
Vines will surround the station’s exterior awning and rebranded interior and exterior roundels, while official audio announcements will also refer to the station as ‘Westminster Jungle’.
“This activity has taken our political animals out of the zoo and into the jungle: something that we feel represents the shift in the political landscape since we launched the campaign six months ago,” says Lynne Fraser, head of brand and campaigns at The Times and The Sunday Times.
“Reflecting the mood of the nation in a refreshing way we want to reach out to audiences and reassure them that The Times and The Sunday Times are here to guide them through.”
Monday, 21 October
The BBC launches campaign to shift perceptions of iPlayer
The BBC is launching a marketing campaign aimed at changing the way the public, particularly young people, think about and use BBC iPlayer.
As more consumers stream content, iPlayer is seen as critical to the BBC’s future success. But viewers, particularly younger ones, are more likely to head to Netflix or Amazon Prime to watch content than BBC iPlayer.
The three 60-second spots show young BBC talent from popular programmes disguised as out-of-touch characters missing the point of their shows. It stars Kate Phillips from Peaky Blinders, Natasia Demetrious from comedy horror series What We Do in the Shadows, and Kiell Smith-Bynoe from sitcom Ghosts.
Kerry Moss, portfolio head of marketing for BBC iPlayer, says: “With ‘Wasted on Some’ we wanted to show younger audiences that BBC iPlayer has incredible content made with them in mind. We were thrilled to be able to bring together incredible talent to create these hilarious caricatures.”
TV ads are supported by cinema, outdoor, digital, social and print advertising.
Brands back mental health promise to staff
Companies including Lloyds Banking Group, Unilever and the John Lewis Partnership are among 30 major employers to sign up to an agreement to improve how mental health is treated in the workplace.
The mental health at work commitment is an attempt by businesses and the public sector to agree to a common approach. Alongside businesses, major employers’ groups such as the CBI and the Department for Digital, Culture, Media and Sport have agreed to adopt six standards developed with the help of mental health charities and trade organisations.
The standards include a promise to prioritise mental health in the workplace, improving working practices, and offer tools and support to those that might need it.
The government shifts messaging behind Brexit campaign
The government has changed the wording of its ‘Get Ready for Brexit’ campaign, putting less emphasis on the date after MPs delayed the approval process of the deal with the EU.
The government website encouraging people to get ready for Brexit now says: “We could still leave with no deal on 31 October.” Previously it had said: “The UK is due to leave on 31 October.”
Logos that appeared prominently on the website saying “Brexit 31 October” also appear to have been removed.
The campaign is aimed at preparing the public and British businesses for the UK’s departure from the EU. It has previously been criticised for its £100m price tag, as well as for “inaccurately” implying the UK will definitely leave at the end of October.
John Lewis and Waitrose cut back on Christmas plastic
John Lewis and Waitrose will stop selling Christmas crackers with plastic toys and puzzles from next year as part of plans to reduce single-use plastic.
Instead, the retailer will switch to crackers with items made from recyclable materials such as metal and paper.
It will also crackdown on glitter, embossing cardboard crackers rather them decorating them with plastic glitter, as well as cutting down the amount of glitter it uses to decorate its own-brand wrapping paper, gift bags, tags and advent calendars.
Dan Cooper, the head Christmas buyer at John Lewis, says: “Reducing the amount of single-use plastic in products and packaging is really important to us and our customers. One of the challenges I face as a buyer is that we plan 18 months ahead, so it takes time for changes to become a reality.
“I’m always searching for new, more sustainable products which will make Christmas sparkle but won’t end up spoiling our environment.”
More bad news for the high street as future of Bonmarché and Monsoon Accessorize unclear
There could be two more casualties of the struggles on the UK high street, with Bonmarché appointing administrators and Monsoon Accessorize’s future at risk.
Bonmarché says tough trading and the Brexit delay has hit its business, which specialises in womenswear for the over-50s. Its 318 stores will remain open while a buyer is sought.
“We have spent a number of months examining our business model and looking for alternatives. But we have been sadly forced to conclude that under the present terms of business, our model simply does not work,” says CEO Helen Connolly.
The future of Monsoon Accessorize, meanwhile, is also in doubt, with tough trading meaning a loan needed as part of a restructure may not be available.
Founder Peter Simon committed £30m in loans and the retailer is already using £12m of those. It says it may need the other £18m if trading conditions worsen, but this would not be automatically available if its misses management targets.